safripol2
Case study

The acquisition of Safripol supports KAP’s strategic drivers

High barriers
to entry
Industry diversification
Adding value
through
specialisation
Solid returns
on capital
employed

The acquisition of Safripol established a diversified chemical division, incorporating the existing operations of Hosaf and Woodchem. Safripol’s inclusion in the group added another industry-leading industrial asset that is complementary to existing operations and, together with Hosaf, has established a unique polymer business cluster.

Together, Hosaf and Safripol have an estimated 37% market share in PP and 70% in HDPE and PET. There is only one other local PP supplier, with the rest of the market being supplied by imports. The business model, with global indexed and US dollar-priced products and raw materials, provides a pure US dollar margin business within South Africa.

An overlap in the customer base between Hosaf and Safripol further provides additional value to customers:

  • Synergies within the polymer cluster add to increased revenue, increased operational efficiencies and cost savings, due to wider product offerings, value creation and integrated management and support structures.
  • Distribution efficiencies will be created by combining deliveries and improving utilisation of transport through return loads on long-haul deliveries.
  • Sales and marketing structures will extract greater value from a consolidated client base.
  • Research and development teams from Hosaf and Safripol have been integrated and will ensure consistent applications of world-class and leading technical expertise to deliver premium products.

The combined and complementary products of Safripol and Hosaf created a polymer cluster that strategically positions the chemical division to provide three of the five polymers that underpin the plastics industry:

  • Polyethylene (PP) is a lightweight, high melting point plastic with high stiffness, hardness and strength. PP is used in the manufacture of injection-moulded articles, blow-moulded containers, pipe, sheet and textile fibres.
  • High-density polyethylene (HDPE) is polymerised from ethylene to produce a plastic with excellent stiffness and environmental stress crack resistance. It has superb chemical resistance and low water absorption and is ideally suited to the food industry.
  • Polyethylene terephthalate (PET) is used in the beverage and packaging industries, and primarily in the bottling industry because of its high intrinsic viscosity and clarity.

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